EXHIBIT 10.28
EMPLOYMENT AGREEMENT
(Xxxxxxx X. Xxxxx)
This EMPLOYMENT AGREEMENT, dated October 1, 2001 (this "Agreement"), is
between VerticalNet, Inc., a Pennsylvania corporation (the "Company"), and
Xxxxxxx X. Xxxxx (the "Employee").
The Company and the Employee, each intending to be legally bound by this
Agreement, agree as follows:
1. Employment
This Agreement is effective October 1, 2001 (the "EFFECTIVE DATE"). The Employee
shall be the Chief Executive Officer of the Company and shall perform duties
consistent with this position as are assigned by the Board of Directors of the
Company (the "BOARD").
2. Performance
The Employee shall devote substantially all of his business time and efforts to
the performance of his duties under this Agreement, however, the Employee may
(a) serve on civic or charitable boards or committees, (b) serve on corporate
boards as a non-employee board member and (c) manage Employee's personal
investments. The Employee must inform the Company of any corporate boards on
which he serves. The Employee cannot serve on any corporate board that would
violate the Employee's non-competition restrictions.
3. Term
The initial term of employment under this Agreement (the "INITIAL TERM") begins
on the Effective Date and extends for 2 years. This Agreement renews
automatically for one year renewal terms (a "RENEWAL TERM") unless either the
Employee or the Company gives the other party written notice of nonrenewal at
least one year before the end of the Initial Term or any Renewal Term then in
effect. The Agreement renews automatically for a 2 year Renewal Term upon a
Change of Control, as defined in Section 12, beginning on the date of the Change
of Control. The Initial Term plus any Renewal Term then in effect are the term
of this Agreement (the "EMPLOYMENT TERM"). The Employment Term may be terminated
early as provided in Sections 7 through 12 of this Agreement.
4. Salary
The Employee's annual salary (the "SALARY") is payable in installments when the
Company customarily pays its officers (but no less often than twice per month).
The Salary is at the initial rate of $150,000 (the "INITIAL SALARY"). The Board
or the Compensation Committee shall review the Salary at least once a year. The
Salary shall never be less than the Initial Salary.
5. Bonus
The Employee shall be entitled to participate in any bonus programs established
by the Board or the Compensation Committee for executive officers generally. The
Employee's target bonus shall be equal to 50% of the Salary (the "TARGET
BONUS"). All bonus programs, as well as the goals for achieving the Target
Bonus, are at the discretion of the Board or the Compensation Committee.
6. Confidential Information, Non-Competition and Non-Solicitation
The Employee agrees to continue to be covered by the terms of the Employment,
Confidential Information, Invention and Non-Competition Agreement that the
Employee entered into with the Company, except that the restrictive period after
termination of employment in Section 6 (titled: Non-Solicitation of Customers
and Employees; Non-Competition) shall be 12 months instead of 18 months.
7. Death
If the Employee dies during the Employment Term, then the Employment Term shall
terminate, and thereafter the Company shall not have any further liability or
obligation to the Employee, the Employee's executors, administrators, heirs,
assigns or any other person claiming under or through the Employee, except (a)
that the Employee's estate shall receive any unpaid Salary that has accrued
through the date of termination, and (b) the Employee's outstanding options are
accelerated for an additional period of 6 months that is applied between
scheduled vesting dates to accelerate vesting on the pro rata portion of the
option vesting schedule using a monthly basis instead of the scheduled vesting
dates.
8. Total Disability
If the Employee becomes "totally disabled," then the Employment Term shall
terminate, and thereafter the Company shall have no further liability or
obligation to the Employee hereunder, except as follows: the Employee shall
receive (a) any unpaid Salary that has accrued through the date of termination,
(b) continued Salary for 3 months following the
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date the Employee is considered totally disabled, and (c) whatever benefits that
he may be entitled to receive under any then existing disability benefit plans
of the Company.
The term "TOTALLY DISABLED" means: (a) if the Employee is considered totally
disabled under the Company's group disability plan in effect at that time, if
any, or (b) in the absence of any such plan, under applicable Social Security
regulations.
9. Termination for Cause
The Company may terminate the Employee for "cause" immediately upon notice from
the Company. If the Employee is terminated for "cause", then the Employment Term
shall terminate and thereafter the Company shall not have any further liability
or obligation to the Employee, except that the Employee shall receive any unpaid
Salary that has accrued through the date of termination.
The term "CAUSE" means: (a) the Employee is convicted of a felony, or (b) in the
reasonable determination of the Board, the Employee has done any one of the
following: (1) committed an act of fraud, embezzlement, or theft in connection
with the Employee's duties in the course of his employment with the Company, (2)
caused intentional, wrongful damage to the property of the Company, (3)
materially breached (other than by reason of illness, injury or incapacity) the
Employee's obligations under this Agreement or under any written
confidentiality, non-competition, or non-solicitation agreement between the
Employee and the Company, that the Employee shall not have remedied within 30
days after receiving written notice from the Board specifying the details of the
breach, or (4) engaged in gross misconduct or gross negligence in the course of
the Employee's employment with the Company.
10. Termination by the Employee
The Employee may terminate this Agreement by giving the Company written notice
of termination one month in advance of the termination date. The Company may
waive this notice period and set an earlier termination date. If the Employee
terminates this Agreement, then on the termination date, the Employment Term
shall terminate and thereafter the Company shall have no further liability or
obligation to the Employee under this Agreement, except that the Employee shall
receive any unpaid Salary that has accrued through the termination date. After
the termination date, the Employee shall be required to adhere to the covenants
against non-competition and non-solicitation described in Section 6 of this
Agreement.
11. Termination without Cause by the Company
The Company may terminate the Employee without "cause" by giving the Employee
written notice of termination one month in advance of the termination date. The
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Employee may waive this notice period and set an earlier termination date. If
the Employee is terminated without "cause," then the Employment Term shall
terminate and thereafter the Employee shall be entitled only to the following
under this Agreement:
(1) the Company will pay to the Employee a lump sum severance
payment (the "Severance Payment") in the amount equal to either: one year
of the Salary then in effect if the Employee has been employed by the
Company for less than one year; or 2 years of the Salary then in effect if
the Employee has been employed by the Company for one year or more, and
(2) the Employee's group healthcare, group life and AD&D coverage
will be continued for one year, to be paid in full by the Company, and
(3) the Employee's covenants against non-competition (as described
in Section 6 of this Agreement) shall be reduced to a 6 month period from
the termination date, from 12 month period contained in Section 6 of this
Agreement, and
(4) unvested options granted to the Employee in 2001 are accelerated
for a total period equal to 6 months plus one additional month for each
month that the Employee has been employed by the Company, that is applied
between scheduled vesting dates to accelerate vesting on the pro rata
portion of the option vesting schedule using a monthly basis instead of
the scheduled vesting dates, and
(5) all options granted in 2001 that are vested (including
accelerated vesting) at termination will remain exercisable for 5 years
after termination of employment, but not longer than the total life of the
options, and
(6) the Employee will not receive any accrued vacation or bonus
payments, and
(7) the Employee and the Company will enter into a mutual general
release.
12. Change of Control
During the 2 year period after a Change of Control, if the Company terminates
the Employee without cause, or if the Employee terminates this Agreement for
"Good Reason" by giving the Company written notice of termination one month in
advance of the termination date (which the Employee shall have the right to do
during this 2 year period), then:
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(1) all the rights, benefits and obligations under Section 11 of
this Agreement for termination without "cause" by the Company shall apply,
and
(2) in addition to the Severance Payment, the Company will pay the
Employee a lump sum payment at the same time as the Severance Payment (the
"CHANGE OF CONTROL PAYMENT") equal to: (a) 300% of the Target Bonus for
the year in which the termination occurs, plus (b) one additional year of
the Salary.
The term "CHANGE OF CONTROL" means:
(a) any sale, lease, exchange, or other transfer of all or
substantially all of the assets of the Company to any other person or
entity other than a wholly-owned subsidiary of the Company (in one
transaction or a series of related transactions),
(b) dissolution or liquidation of the Company,
(c) when any person or entity, including a "group" as contemplated
by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
acquires or gains ownership or control (including, without limitation,
power to vote) of more than 50% of the outstanding shares of the Company's
voting securities (based upon voting power), or
(d) any reorganization, merger, consolidation, or similar
transaction or series of transactions that results in the record holders
of the voting stock of the Company immediately prior to such transaction
or series of transactions holding immediately following such transaction
or series of transactions less than 50% of the outstanding shares of any
of the voting securities (based upon voting power) of any one of the
following: (1) the Company, (2) any entity which owns (directly or
indirectly) the stock of the Company, (3) any entity with which the
Company has merged, or (3) any entity that owns an entity with which the
Company has merged.
The term "GOOD REASON" means:
(a) the transfer, without the Employee's prior written consent, to a
location that is more than 50 miles from the Employee's principal place of
business immediately preceding the transfer,
(b) a material reduction of the Employee's authority, duties or
responsibilities after the Employee has provided the Company with
reasonable notice and an opportunity to cure,
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(c) any failure of the Company materially to comply with and satisfy
the terms of this Agreement, or
(d) the nonrenewal of this Agreement by the Company.
13. Parachute Payment
Notwithstanding anything to the contrary in this Agreement, if the
Employee is a "disqualified individual" (as defined in Section 280G(c) of
the Code), and any severance benefit provided for in this Agreement,
together with any other payments which Employee has the right to receive
from the Company and its affiliates, would constitute a "parachute
payment" (as defined in Section 280G(b)(2) of the Code), then Severance
Payment together with the Change of Control Payment provided hereunder
shall be either:
(a) reduced (but not below zero) so that the present value of such
total amounts received by Employee will be one dollar ($1.00) less than
three times the Employee's "base amount" (as defined in Section 280G of
the Code) and so that no portion of such amounts received by the Employee
shall be subject to the excise tax imposed by Section 4999 of the Code or
(b) paid in full,
whichever of (a) or (b) produces the better net after-tax position to the
Employee (taking into account any applicable excise tax under Section 4999
of the Code and any applicable income tax).
The determination as to whether any such reduction in the amount of the
severance benefit is necessary shall be made initially by the Company in good
faith. If a reduced payment is made and through error or otherwise that payment,
when aggregated with other payments from the Company (or its affiliates) used in
determining if a "parachute payment" exists, exceeds one dollar ($1.00) less
than three times the Employee's base amount, then the Employee shall immediately
repay such excess to the Company upon notification that an overpayment has been
made.
14. Governing Law
This Agreement is governed by Pennsylvania law.
15. Entire Agreement; Amendments
This Agreement sets forth the entire understanding among the parties hereto, and
shall supercede all prior employment, severance and change of control agreements
and any
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related agreements that the Employee has with the Company or any subsidiary, or
any predecessor company.
This Agreement may not be modified or amended in any way except by a written
amendment executed by the Employee and the Company.
16. No Assignment
All of the terms and provisions of this Agreement shall be binding upon and
inure to the benefit and be enforceable by the respective heirs,
representatives, successors (including any successor as a result of a merger or
similar reorganization) and assigns of the parties hereto, except that the
duties and responsibilities of the Employee hereunder are of a personal nature
and shall not be assignable in whole or in part by the Employee.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto duly executed this Employment Agreement as of the day and year
first written above.
VERTICALNET, INC:
By:_________________________________
Name: Xxxxx X. XxXxxxxx, Xx.
Title: Executive Vice President
EMPLOYEE:
_________________________________
Name: Xxxxxxx X. Xxxxx
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